CANBERRA: Oil and gas giant Chevron is taking its landmark fight with the Australian Taxation Office over a $340 million bill to the High Court. The Gorgon and Wheatstone LNG projects operator yesterday said the company had decided to seek special leave to appeal to the court over the financing dispute. The case has wide-ranging implications for Chevron and other multinationals. If the appeal fails, it could lead to further ATO demands for considerably more additional tax on the subsequent loans under the same arrangements. It could also lead to the agency pursuing other companies using similar tax structures to develop resources projects in Australia. Chevron last month lost in the Federal Court of Appeal its challenge to ATO assessments over five financial years from 2004- 2008. The dispute relates to interest paid by Chevron Australia to a US subsidiary, with the tax office arguing the company had reduced its liability by shifting profits offshore. The assessments were made on the basis that interest paid by the Australian company was greater than it would have been under an arm’s- length dealing between independent parties. “As recognised by the Federal Court, Chevron Australia’s financing is a legitimate business arrangement, and the parties differ only in their assessments of the appropriate interest rate to apply,” a company spokesman said.
“Chevron Australia pays a substantial amount of tax in Australia, including royalties, payroll tax, fringe benefits tax, excise and interest withholding tax,” he said. “Since 2009, we’ve paid about $4.5 billion in Federal and State taxes and royalties. “We are one of Australia’s largest investors and employers. In addition to tax payments, Chevron will continue to deliver substantial economic benefits for decades to come.” Chief financial officer Patricia Yarrington earlier this month said the Federal Court of Appeal ruling against Chevron would affect investment in Australia and dramatically change rules for inter-company lending. She said the decision deviated substantially from recognised international practice. The tax office says the transfer pricing rules are designed to ensure cross-border related party transactions are priced fairly and that multinationals do not obtain a tax benefit through “mis-priced” dealings.
Chevron cited independent economic analysis as showing that between 2009 to 2040, Gorgon, Wheastone and other activities would deliver more than $1 trillion to Australia’s gross domestic prduct, 5000 jobs a year and more than $338 billion to Federal Government revenue. The company has also been under fire in Australia for claiming deductions under the petroleum resource rent tax (PRRT). It said Chevron Australia was expected to start paying the tax by 2029-2035 and would likely pay more than $60 billion-$140 billion over the life of its projects.
